Seven California beer and beverage distributors have formed an alliance to provide a nearly statewide network to suppliers under the California Beverage Solution banner.
The founding seven distributors include six independent Anheuser-Busch (A-B) distributors, along with one of the largest craft-focused distributors in the country. They include:
- Advance Beverage Company;
- Donaghy Sales;
- Heimark Distributing;
- Markstein Sales Company;
- Matagrano Beverage;
- Pacific Beverage;
- And Stone Distributing.
Those seven wholesalers cover around 90% of California and the majority of the state’s population centers. Additional wholesalers in the outlying portions of the state may be added in the future as associate members. Collectively, the members service 37,100 customers in the state.
California Beverage Solution is being formed to serve suppliers of beer, wine, distilled spirits and non-alcoholic offerings with a statewide network. Talks with potential suppliers are expected to begin now.
Heimark Distributing president and California Beverage Solution board member Peter Heimark told Brewbound that among the reasons for the alliance is to compete with larger, multi-state wholesalers such as the Reyes Beer Division, RNDC, Southern Glazer’s and Breakthru Beverage. The latter’s acquisition of Wine Warehouse earlier this year propelled the alliance.
“We all have the advantage of being local distributors,” Heimark said. “Our biggest disadvantage was the network across the state. While we all remain independent distributors in our own market, this aligns us for new brands. It doesn’t affect any of our existing brands.”
Heimark said the No. 1 attribute new suppliers are seeking in California is a statewide network. By offering statewide coverage, the hope is to build long-term relationships with new suppliers.
“Every supplier asks us, ‘How do I put this puzzle together? What’s the network?’” he said. “So we’re hoping that this really simplifies that process for them because it’s already essentially in place, and they don’t have to make 13 different calls and do 13 sets of contract negotiations. They can essentially do it one time.”
Another reason for the formation of California Beverage Solution is due to the large presence of A-B branches in the state and their inability to sell distilled spirits, Heimark said.
“That’s really the piece of our portfolios that this group is really lacking as the beverage market evolves,” he added. “This is an attempt to put a network together that can effectively sell those types of brands as well.
“And while I’m guessing Anheuser-Busch will have some concerns – especially because one of our founding members is Stone Distributing, which is a competitor of theirs – if they see that this is a viable network for those kind of brands, that they might as a supplier consider us for some of their distilled spirits brands, because they haven’t been able to bring most of those brands with the exception of Nütrl to their independent distributors in California.”
New brands coming into California Beverage Solution will have a single point of contact, Heimark said. Three managing members representing north, central and southern California, including Markstein Sales president Laura Markstein, Advanced president Mike Lazzerini and Stone Distributing general manager Brian Fried.
California Beverage Solution is set up as an LLC, with the founding members each as equal partners in the business, Heimark said. However, he said there isn’t an expectation that the LLC will generate income. Each of the founding members also made an initial investment to cover legal, consulting and PR costs.
“We do anticipate at some point that if this is successful, and it grows enough, we’ll probably end up hiring a professional to manage it for us, much in the way that Indiana’s and New York’s statewide networks are being done,” Heimark said.